SHARES in Smith & Nephew hit a record high yesterday on speculation that it had rebuffed a near-£7billion takeover bid from US rival Johnson & Johnson.

The maker of replacement knees and hips rose 9.5 per cent, or 62p, to 712p, giving it a value of £6.3 billion, on hopes that J&J will return with a higher offer.

Its initial approach, said to be 750p a share, was rejected by Smith & Nephew on the grounds that it was too low.

Rumours that S&N was now in play raised the possibility that another rival, such as Zimmer, Stryker or private-equity owned Biomet, might also be tempted to make a move.

S&N declined to comment or issue a stock market announcement, running the risk of angering shareholders should it emerge that a bid had been made.

Banknote printer De La Rue fell foul of investors when it failed to disclose an approach from French group Oberthur Technologies. S&N’s advisers, JP Morgan, are the same as De La Rue’s.

J&J also declined to comment on whether it had made an approach. According to Takeover Panel rules, companies must disclose a bid if the shares move more than 5 per cent in a day. Analysts at Bernstein Research said the absence of an announcement probably meant an approach for S&N had not been made.

They also warned that a tie-up between J&J and S&N would run into anti-trust problems.

Other analysts said the scale of possible divestments could wipe out any financial benefits from a deal. Goldman Sachs said a merger would give the firms a 36 per cent market share in joint replacements.

However, analysts at Investec said J&J would be a “credible bidder” with the financial firepower and the arguments to overcome any anti-trust concerns.

Oberthur Technologies called for De La Rue to provide a “complete picture of its current position and prospects” yesterday after being given a February 7 deadline by the Takeover Panel to make a concrete offer for the banknote printer.

The French group is concerned about De La Rue’s relationships with its largest customer, the Reserve Bank of India, which is believed to have been the victim of the problems that dogged De La Rue’s banknote production.